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2013/02/22China Becomes Biggest Trading Nation

China surpassed the United States last year and became the world’s biggest trading nation. Since the end of World War II in 1945, no other country had exceeded the US.

Earlier in 2012 HSBC Holdings PLC had predicted this scenario would happen in 2016, but the year ended with China ranking first. The measurement was taken by adding the year’s combined total for imports and exports. China’s trade in goods totaled $3.87 trillion (China’s Customs Administration), compared to the US’ $3.82 trillion (U.S. Commerce Department). However, the US economy still accounts for more than double the size of China’s. According to the World Bank, in 2011, the US’ GDP reached US$15 trillion, while China’s was US$7.3 trillion.

Nicholas Lardy, Senior Fellow at the Peterson Institute for International Economics, stated that it was remarkable that an economy that is only a fraction of the size of the American economy has a larger trading volume. He also emphasized that the increase is not the result of an undervalued Renminbi that has led to an export boom, considering Chinese imports have grown more rapidly than exports since 2007.

Jim O’Neill, Chairman at Goldman Sachs Asset Management states: “for so many countries around the world, China is becoming rapidly the most important bilateral trade partner. At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe”.

China has already become Latin America’s second largest trade partner, the US being first. Latin America needs to consider China’s increasing role as a global trade partner and take advantage of all the opportunities this may bring by establishing trade agreements and pacts that will benefit both regions.